- The Centers for Medicare and Medicaid Services (CMS) proposed a new rule which would test changes to how Medicare Part B reimburses doctors for the drugs they prescribe.
- Currently, doctors are reimbursed for the average sales price of a Medicare Part B drug, plus a 6% add-on. CMS plans to test whether a 2.5% add-on plus $16.80 per drug per day would change doctors' prescribing incentives.
- In 2015, Medicare paid $20 billion to doctors and outpatient departments for Part B drugs they prescribed. CMS hopes the change could better motivate doctors to prescribe cheaper drugs with similar efficacy to more expensive drugs.
In its announcement, CMS said it "intends for the test to result in savings through changes in prescribers' behavior." Doctors or outpatient departments often have a number of drugs to choose from when treating a Medicare patient. Under the current system, they would receive the same 6% add-on to the average sales price for all drugs. More expensive drugs mean higher reimbursements.
When choosing between drugs with similar efficacy, doctors may be incentivized to choose the higher priced drug, resulting in greater costs for the system as a whole. The proposed change would lower the percentage add-on while including a flat fee, shrinking the difference in reimbursement rates between drugs.
Additionally, CMS plans to test indications-based pricing, where it would vary payments based on the clinical effectiveness of the drug in a certain indication.
If finalized, the proposed model would run for five years with the new pricing frameworks active in the last three years. While all healthcare providers in Medicare part B would be required to participate, not all would be subject to the test—CMS would placed providers in control or study groups based on zip code.
A coalition of more than 100 trade groups sent a letter to CMS last week detailing their opposition to this proposed model and asking for the rule to be withdrawn.
The proposed rule will be open for comments for 60 days, through May 9th, 2016.